arc / plc program overview. the 2014 farm bill provides the following: eliminates dcp and acre...

ARC / PLC Program Overview

ARC/PLC Program

The 2014 Farm Bill provides the following:

• Eliminates DCP and ACRE program

• Allows for a “one-time” decision– REALLOCATE base acres

and/or – UPDATE Counter-Cyclical Yields on a farm

ARC/PLC Program

Two NEW Programs

ARC: Agriculture Risk Coverage (Revenue Based)Two Options:

• ARC-CO – “County” Level Coverage• ARC-IC – “Individual” Level Coverage

PLC: Price Loss Coverage (Price Based)

ARC/PLC ProgramCovered Commodities for ARC/PLC

Barley Canola Corn

Crambe Flaxseed Garbanzo, Large

Garbanzo, Small Grain Sorghum Lentils

Mustard Seed Oats Peanuts

Peas, Dry Rapeseed Rice, Long Grain

Rice, Medium Grain Safflowers Sesame Seed

Soybeans Sunflower Seed Wheat

ARC/PLC Program

ARC/PLC Program Process has three PARTS:

1. Update: Owners can Reallocate Base acres and/or update Counter-Cyclical Yields

2. Election: Once Base Acres and Yields are set, then the Election of PLC, ARC-CO or ARC-IC can completed.

3. Enrollment: Once Election has been completed then Enrollment takes place.

Part 1UpdateProcess

ARC/PLC Update Process

ARC/PLC Program Timeline:

Update Process: Reallocate Base acres and/or update Yield process

• Started September 29, 2014 • Ends February 27, 2015

Owner and Operator Acreage History Letters

The first week of August, ALL owners and operators should have received the following:

1. Letter provides basic background information on base acreage “Reallocation” and “Update” of Yield options.

2. “Summary Acreage History Report”:

• Acreage of covered commodities reported to FSA, 2008 - 2012 per FSA FARM.

• Current (2014) “Base” Acres & “CC Yields”.

NOTE: Only Current farms with base acres received letters with the history reports


Missing Acreage History Information:

• The “Summary Acreage History Report” may show “Blanks” in one or more of the years, 2008 through 2012.

• If a current FSA “Tract #” was changed in a year 2009 through 2014, then our acreage reporting system could not identify the needed covered commodities reported.

• Tract Divisions, Tract Combinations and/or Farm Transfers completed between 2009 through 2014 are the affected Tracts


Missing Acreage History Information:

• FSA County Offices have been provided a report that can help them identify these “Blanks” or missing data Tracts.

• County Offices can research the acreage history folders to identify the missing covered commodities reported and enter the missing data into the data base for processing

• In Iowa, once the County Office completed the research, they sent an updated letter to operators and/or owners with the corrected acreage history for the farm, 2008 - 2012.


Update Process: BASE OPTIONS

1. Retain Current (2014) Base Acres OR

2. Reallocate Base Acres (cannot increase TOTAL)

• Planting History of covered commodities, 2009 through 2012

Note: This option is available to owners and farms regardless of program election:PLC/ARC-CO/ARC-IC

BASE REALLOCATION EXAMPLE #1

Farm #2566Cropland: 160.0 acresCorn Base: 70.0 acresSoybean Base: 70.0 acresOats Base: 20.0 acres

CROP HISTORY

CROP 2009 2010 2011 2012

Corn 80.0 69.5 80.0 69.5

Soybeans 69.5 80.0 69.5 80.0

BASE REALLOCATION EXAMPLE #2

Farm #2566Cropland: 149.5 acresCorn Base: 74.7 acresSoybean Base: 74.8 acres

CROP HISTORY

CROP 2009 2010 2011 2012

Corn 74.5 74.5 74.5 74.5

Alfalfa(Not a Covered Commodity)

75.0 75.0 75.0 75.0


Update Process: YIELD OPTIONS

1. Retain Current Counter-Cyclical YieldsOR

2. Update Yields: Covered Commodities: 2008 – 2012 (simple average of years planted X 90%) A Substitute Yield is available under two circumstances explained later.Note: This option is available PER Crop AND available to owners and farms regardless of program election: PLC/ARC-CO/ARC-IC


Update Yields (continued)

Substitute Yield definition:• 75% of the 2008 through 2012 simple

county average yield per planted acre for the covered commodity

Note: County Substitute Yields by crop have been posted to the ARCPLC

website:WWW.fsa.usda.gov


Update Yields (continued)

Substitute yields can be used when:

1. Farm’s yield is below the substitute yield in any year, 2008 through 2012

OR2. The crop was planted in a year and the owner does not have yield records available.


Update Yields (continued)Operators or owners can provide “Yields” for the years the crop was planted on the farm, 2008 through 2012

Yields are “Certified” to the County Office at the “FARM” level

County Offices are NOT accepting production records and/or calculating yields for producers

Upon certifying yields, the OWNER makes the decision on whether to update or retain and is responsible for having the records available


Update Yields (continued)Certified Yields are subject to spot-check and the “owner” will be responsible for providing the records to verify the accuracy of the yields.

Acceptable records for a spot-check would include:

• RMA data, specific year yields used in APH records• Production Evidence, sold or commercial storage• On-Farm storage records• FSA Loan Records

Note: Acceptable records are the same as required under the ACRE program in the previous farm bill, if spot-checked


Update ProcessYIELD

Once the decision is made to “Retain” or “Update” the yield(s) on the farm the new yield becomes the PLC Yield for the farm

Payment Yield Update Example 1

5 Year average of Planted acreage

Farm #1 Current Corn Yield: 142/bu Crop

Corn

2008 2009 2010

2011 2012 Total

Avg. Yield

PLC Yield (90%)

151 165 155 180 119 773 155 139/bu

Avg. CO Yield (75%)

122 122 122 122 122

Payment Yield Update Example 2

4 Year Average of Planted acres

Farm #2 Current Corn Yield: 132/bu Crop

Corn

2008 2009 2010 2011

2012 Total

Avg. Yield

PLC Yield (90%)

Zero Plant

Planted No Evidence

175 185 176 658 165 148/bu

Avg. CO Yield (75%)

122 122 122 122 122

Reallocation/CC Yield Decision

Update Decision (Base &Yield) :

A “current” OWNER makes the update decision:

• Reallocate or Retain Base Acres

• Update or Retain YieldsNOTE: Current owner is defined as an owner on the farm the day the CCC-858 is submitted to the County Office

Reallocation/CC Yield Decision Disputes

If any current owner submits a conflicting Reallocation/Yield Update request:

• No reallocation/yield update will be approved for the farm until, ALL current owners provide County Committee written evidence the dispute has been resolved during the reallocation period

If NO decision is made during the Reallocation/Yield update period:

• Farm will retain the 2014 Base Acres and Yields associated with the farm

Part 2ElectionProcess

ARC/PLC Election Process


Election: Once Base Acres and Yields are set, then the Election of PLC or ARC can be

completed.

• Starts November 17, 2014 • Ends March 31, 2015

ARC/PLC Election ProcessAuthorizes a one-time, 5-YEAR “ELECTION” of programs:

• Price Loss Coverage (PLC) – offers price protection.

• Ag Risk Coverage-County (ARC-CO) – offers revenue protection at the COUNTY level

• Ag Risk Coverage-Individual (ARC-IC) – offers revenue protection at an individual farm level across all farms enrolled and covered commodities planted


ELECTION is Farm By Farm

If ARC-CO or PLC is selected on a Farm:

• Each Covered Commodity will select PLC or ARC-CO

• RMA’s SCO – is an option for crops with PLC selected

NOTE: Supplemental Coverage Option (SCO) is sold by crop insurance agents as it is a crops insurance product.


If ARC-IC is selected on a Farm:

• ALL covered commodities planted on the farm are ARC-IC crops. • PLC is NOT an option for the farm• ARC-CO is NOT an option for the farm• RMA’s SCO - is NOT an option for the crop in

the county

NOTE: Supplemental Coverage Option (SCO) is sold by crop insurance agents as it is a crops insurance product.


“Current Producers” make the Election of PLC, ARC-CO or ARC-IC on each FSA Farm Number:

a. “Current” producers with an “interest” in cropland on the farm will make the

one-time irrevocable election.

b. Failure to make an election by the deadline will result in PLC election starting in 2015 through 2018 and NO payments for 2014.


Current Producer:

Means the person or legal entity meeting the “definition” of producer on the day that person or legal entity is signing any form or performing any action required under this part.


Definition of a producer: A person or legal entity with a share in a crop on cropland on the farm and shares in the risk of producing the crop on the farm.

NOTE: Cash Rent Owners do not have a share in the crop nor does the owner share in the risk of producing the crop

Price Loss Coverage

Payments made when effective price is less than the reference price for a covered commodity.

• Effective Price is the higher of Marketing year Average Price (MYA) for the crop or the National Loan Rate for the crop.

• Payments made on 85% of base acres of the covered commodity.

• Payments are made regardless of the planting of the covered commodity.

NOTE: The reference price & national loan rate for each crop was set by statute and remains the same for all years of the farm bill.

Reference Price/National Loan Rate

The Reference Price & National Loan Rate remains the same for the life of the 2014 farm bill:

Crop Reference Price

National Loan Rate

Max PLC Rate

Barley $4.95 $1.95 $3.00

Corn $3.70 $1.95 $1.75

Oats $2.40 $1.39 $1.00

Soybeans $8.40 $5.00 $3.40

Wheat $5.50 $2.94 $2.56

Grain Sorghum

$3.95 $1.95 $2.00

PLC Example

Farm #1: Corn Base: 100 acres PLC Yield: 142/bu

Reference price for Corn is $3.70/bu.

The Corn loan rate is $1.95/bu.

If the marketing year average price (hypothetical) is $3.50/bu, the PLC payment rate would be $0.20/bu ($3.70 - $3.50).

PLC Example

Example(continued)

The payment computation for this example would be:

Corn base: 100 acres X 85% X $0.20/bu X 142/bu = $2414.00

ARC-CO Program

Payments made when the ARC-CO Actual Revenue is less than the ARC-CO Guarantee (86% Benchmark) for a covered commodity.

County “Yield” data is used, not individual farm data

• The payment rate can be no higher than 10% of the ARC-CO Benchmark Revenue for the covered commodity.

• Payments made on 85% of base acres of the covered commodity.

• Payments are made regardless of the planting of the covered commodity.

ARC-CO Benchmark Revenue Calculation

ARC-CO Benchmark Revenue calculated by multiplying:

5 Year Olympic Average Yield: higher of :• County Yield for the crop • 70% of the county transitional yield (70%T)

5 Year Olympic Average Price: higher of :• Market Year Average (MYA) price• Reference Price for the covered commodity.

ARC-CO Example

ARC-CO Example with one base crop on one farm:

Farm #1: Corn Base: 100 acres PLC Yield: 142/bu

ARC-CO Payment rate cannot EXCEED 10% of the ARC-CO Benchmark Revenue for Corn.

Payments are made on 85% of base acres of the covered commodity.

NOTE: Each “County” will have a different ARC-CO calculation

by crop since the county yield is used in the calculation

ARC-CO Example

Step 1: Corn ARC-CO Benchmark Revenue Calculation (County Data):

Benchmark Yield = 5 year Olympic Average (166)Benchmark Price = 5 year Olympic Average ($5.29)

CORN 2009 2010 2011 2012 2013

Yield 186 162 182 147 154

70% of T-Yield

119 119 119 119 119

MYA Price

$3.55 $5.18 $6.22 $6.89 $4.46

Reference Price

$3.70 $3.70 $3.70 $3.70 $3.70

ARC-CO Example

Corn ARC-CO Benchmark Revenue Calculation:

Benchmark Yield = 166/buBenchmark Price = $5.29Benchmark Revenue = $878.14 (166 X $5.29)

Step 2: Corn ARC-CO Guarantee Calculation:

Benchmark Revenue ($878.14) X 86% = $755.20

ARC-CO Example

Step 3: Corn ARC-CO Actual Revenue:

Corn ARC-CO Actual Revenue Calculation:

(160/bu X $3.50 = $560.00)

NOTE: Use higher of MYA price or National Loan Rate

CROP 2014 CO Actual Yield

(projected)

2014 MYA Price

(projected)

National Loan Rate

Actual Revenue

(projected)

CORN 160 $3.50 $1.95 $560.00

ARC-CO Example

Step 4: ARC-CO Revenue Calculation:

Corn ARC-CO: Guarantee $755.20 Actual Revenue $560.00 Revenue Loss $195.20

Note: Maximum Payment Rate (cap) would be $87.81 (878.14 X 10%)

Step 5: Payment computation for this example would be:

Corn base 100 acres X 85% X $87.81 (cap) = $7464

ARC-IC Program

Payments are made when the ARC-IC Actual Revenue is less than the ARC-IC Guarantee (86% Benchmark) for ALL covered commodities on ALL farms enrolled in ARC-IC in the state for the producer.

• The payment rate is the difference in the ARC-IC Guarantee and the ARC-IC Actual Revenue, but can be no higher than 10% of the ARC-IC Benchmark Revenue for all covered commodities on the farm.

• Payments made on 65% of base acres of all covered commodities on the farm.

ARC-IC Program

ARC-IC includes: Election & Enrollment where only enrolled farms each year are included in ARC-IC revenue calculations

Planting of covered commodities that will be used to calculate Revenues across ALL covered commodities planted.

Production reports of covered commodities.

ARC-IC Program

ARC-IC benchmarks, guarantees and actual revenues are calculated at the farm level and WEIGHTED to the producer’s share of the covered commodities planted across all enrolled ARC-IC farm(s).

• Weighting to the producer share, is the: “Producer Bucket Concept”

• ARC-IC Benchmark Revenues:• 5 Year Olympic Average of the “Revenues”

ARC-IC Example

The ARC-IC farm consists of all farms enrolled in ARC-IC within the state for the producer. The ARC-IC Revenues are calculated across ALL covered commodities planted on ALL farms enrolled in ARC-IC:

EXAMPLE Farm # 1 (one farm enrolled in ARC-IC)

Corn Base: 100 acres Soybean Base: 50 acres

2014 Planted Acres: Corn: 110 acres Soybeans: 50 acres

Producer share is 100% of both crops planted

ARC-IC Example

Step 1: Percentage of covered commodities planted for each crop is the P&CP acres divided by the total acres of covered

commodities on the ARC-IC farm:

NOTE: These percentages are used in “weighting” the producer’s revenues

CROP PLANTED ACRES

% Of Covered Commodity

Planted

Calculations

Corn 110 68.75% (110 / 160)

Soybeans 50 31.25% (50 / 160)

Total 160

ARC-IC Example

Step 2: Calculate Benchmark Revenues for each covered commodity planted. The “Overall” Benchmark Revenue is weighted based on number of covered commodities planted across the ARC-IC farm.

See Next Slide for Calculations

ARC-IC Example

Corn 2009 2010 2011 2012 2013 5-Year Olympic Average Revenue

% Covered Commodity planted

Weighted 5-year Olympic Average

Yield 186 162 182 147 154 70% of T 119 119 119 119 119MYA $3.55 $5.18 $6.22 $6.89 $4.46Reference Price

$3.70 $3.70 $3.70 $3.70 $3.70

Revenue $688.20

$839.16

$1132.04 $1012.83 $686.84

$846.73

68.75% $582.13

Soybean

2009 2010 2011 2012 2013 5-Year Olympic Average Revenue

% Covered Commodity planted

Weighted 5-year Olympic Average

Yield 52 47 50 45 41 70% of T 32 32 32 32 32MYA $9.59 $11.30 $12.50 $14.40 $13.00Reference Price

$8.40 $8.40 $8.40 $8.40 $8.40

Revenue $498.68

$531.10

$625.00 $648.00

$533.00

$563.03 31.25% $175.95

ARC-IC Example

Step 3: Calculation of the “Weighted” Benchmark Revenue:

Corn Benchmark Revenue:($846.73 X 68.75%) = $582.13Soybean Benchmark Revenue:($563.03 X 31.25%) = $175.95

$758.08

Step 4: Calculate the ARC-IC Guarantee:

$758.08 X 86% = $651.95

ARC-IC Example

Step 5: Calculate the ARC-IC Actual Revenue across ALL Covered Commodities planted:

CROP 2014 Production

2014 MYA Price

National Loan Rate

% Of Covered Commodity Planted

ARC-IC Producer Revenue

Corn 160/ac $3.50 $1.95 68.75% $385.00

Soybeans

48/ac $10.00 $5.00 31.25% $150.00

$535.00/ac

ARC-IC Example

Step 6: ARC-IC Payment Calculation:

ARC-IC Guarantee: $651.95 ($758.08 X 86%) ARC-IC Actual Revenue: $535.00

$116.95 revenue loss

Note: The payment rate can be no more than 10% of the ARC-IC Benchmark Revenue ($758.08) which is $75.81 in this example.

Total Base Acres 150 X 65% X $75.81 = $7391

Part 3Enrollment

Process

ARC/PLC Enrollment Process


Enrollment: Once Election has been completed then Enrollment takes place.

• Mid April, 2015• Through Summer of 2015

NOTE: Both 2014 and 2015 will be completed simultaneously.

ARC/PLC Enrollment ProcessAnnual Enrollment Contract to Participate on a farm: An enrollment period will be held for:

• 2014 & 2015 completed simultaneously.

• Completed for each crop year 2014 – 2018.

• Producers can “participate OR not participate” year by year

NOTE: Additional information on enrollment will be provided prior to the enrollment period, spring of 2015

ARC/PLC Program Summary

Acreage & Production Reporting:

• Producers are required to report acres, same as in past programs to be eligible for ARC/PLC payments

• Production Reporting REQUIRED for ARC-IC since producer yields are used in the revenue calculations


ARC/PLC Payments:

• 2014 payments are issued after October 1, 2015 for PLC/ARC-CO/ARC-IC if triggered

• 2015 – 2018 payments are issued after MYA prices are determined and after October 1 of the subsequent year


Planting Flexibility & FAV’sPlanting of any commodity other than FAV’s are allowed on base acres of ARC/PLC farms.

• Planting and Harvesting FAV’s is subject to an “acre for acre” payment reduction when: (No longer a “violation”)

- More than 15% of base acres of the farm enrolled in ARC-CO or PLC are planted to FAV

- More than 35% of base acres of a farm enrolled in ARC-IC are planted to FAV


Prohibition of ARC/PLC Payments

Farms that have 10.0 base acres or less cannot receive a payment. EXCEPTION – Socially disadvantaged or limited resource farmers or ranchers are eligible for payment on these farms

Acreage that has been developed or gone to “non-ag” (commercial/oil/coal/roads/etc.) must be removed from cropland status

Acreage enrolled into a federal conservation program

Farms with 10 Base Acres or Less Exception Example

Farm 1600 has 9 base acres◦ Leigh has 5% share on the contract and certifies

to being SDA/LR.◦ Jeff has 10% share on the contract and certifies

to being SDA/LR. ◦ Andy has 85% share on the contract and does

NOT certify to being SDA/LR.

◦ Leigh and Jeff will receive their share of the payment; no payment will be issued for Andy.


Current FSA-211, Power of Attorneys, are valid for the ARCPLC program if Section A and B are marked as follows:

• Section A, item 2, “All current and ALL future programs”

• Section B, item 1, “All Actions”

Covered Commodity

Actively Engaged in

Farming

Cash-Rent

Tenant

Direct Attribution

Foreign Person

AGI - $900,000

HELC and WC

Payment Limitation

All covered commodities except peanuts X X X X X X $125,000

Applicable Rules for PLC, ARC-CO& ARC-IC, 2014 through 2018

NOTE: Included in each of the $125,000 payment limitations are Market Loan Gains received through Marketing Assistance Loans and

Loan Deficiency payment programs.

Questions ???Visit FSA Website: WWW.fsa.usda.gov• ARC/PLC Program Information will be posted on the ARCPLC

page • ARC/PLC producer web-tools are available on the ARCPLC

page

http://www.fsa.usda.gov/

arc / plc program overview. the 2014 farm bill provides the following: eliminates dcp and acre...

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